France’s largest carmaker PSA Peugeot Citroën has announced that China’s Dongfeng Motor Group and the French state will each pay €800 million ($1.09 billion) for 14 percent of the carmaker, matching Peugeot family’s reduced holding. Much needed cash will also result from a €1.4 billion ($1.92 billion) rights issue in which shareholders and the market can take part.
The Peugeot family will see its 25.4 percent stake and 38 percent of voting rights diluted to parity with Dongfeng and the French state, thus ceding control of the company.
The French carmaker said it has new goals for its partnership with Dongfeng but warned that losses may continue until 2016, a year later than initially promised. “Everything is in place to give Peugeot a new lease of life as a major international carmaker,” Peugeot’s Chief Financial Officer Jean-Baptiste de Chatillon was quoted as saying by Reuters. “We have the products, the teams, the know-how and now we have a new balanced and stable ownership,” he added.
Peugeot and Dongfeng agreed to aim to increase sales at their China joint venture to 1.5 million vehicles a year starting in 2020. The two companies also agreed to jointly establish a research and development center in China, and consider setting up a new company responsible for the sales in the Asia-Pacific region, especially Southeast Asia.
Peugeot’s core automotive division narrowed its loss by 30 percent to €1.04 billion, with net debt rising to €4.15 billion. However, operational cash consumption was €423 million, outperforming Peugeot’s goal of cutting the previous year’s €3 billion cash burn at least by half.
By Dan Mihalascu
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